The year 2020’s pandemic was a life-changing course for the entire world. But the most important lesson it taught businesses was to stay prepared for the unprepared. The global economy took a hit as the stakeholders were least prepared for this kind of disaster. But, what COVID changed drastically was the way businesses were handled. The pandemic taught consumers the difference between want and need, but it also compelled firms to embrace the bleeding-edge technologies and harness those to the fullest and understand the market and its consumers in the process.
The growing trend of Artificial Intelligence in logistics and supply chains serves as the aptest scenario. A survey report by All The Research revealed that the global AI in Logistics and Supply Chain market had a value of 1.7 billion USD in 2018 which is expected to grow at a CAGR of 24% and reach 12 billion USD by 2027. Large enterprises realize that AI can be the answer to their operational problems including resource and cost management, especially for the ones that operate globally, which explains the rapid traction of AI in the logistics industry.
However, it’s not just large enterprises; even small-sized businesses are venturing into small-scale ML services and solutions to gain a competitive edge. This article discusses the various applications of AI in the logistics and supply chain industry. But first, let us try and understand how AI fits into this industry.
The Significance of AI for Logistics and Supply Chains
Artificial Intelligence has proven to be one of the most revolutionary technologies of the tech era. It has offered a multitude of benefits for businesses and has helped them grow more consciously and wisely through resource optimization, improvisation of strategies, and of course, the establishment of a better connection with their consumers.
Just like other sectors, AI holds immense potential for the logistics sector too. Although there are companies that are still hesitant to incorporate AI into their operational systems, they can’t deny the significant purposes it serves. The chief purpose of AI is to give almost-accurate predictions. Its predictive capabilities can come in real handy for logistics as the smart algorithms can help in better management of data, resources and time.
Improved processing is another significant purpose served by AI in the supply chain sector. As automation increases within organizations, it becomes easy for organizations to handle complex processes. Also, it brings more transparency between the various operational departments because logistics demands good coordination and communication between the departments for proper functioning.
Applications of AI in Logistics and Supply Chain
Let us now look at the various applications of Artificial Intelligence in the logistics industry and the ways this technology is helping the sector escalate.
Efficient Management of Supply Chain
AI’s biggest perk is handling large datasets and managing and processing them at high speed. This data in turn reveals relevant information and offers accurate predictions based on the analytical algorithms. Logistics companies can use this data for forecasting and tracking sales, inventory allocation, making informed decisions, and improving operations. For instance, if a company finds a product performing better in a particular region, then it can move some of its extra products from an area of low sales to the region doing better.
Movement of goods, human resources, vehicles, machines, production, and inventory – logistics involve lots of operational complexities that make for an integral part of the industry and require close monitoring and supervision. But manual monitoring presents a lot of challenges and is also subjected to flaws.
With AI, companies can have better supervision with real-time monitoring. It can help in the early detection of problems in the machines before it leads to any accident. It can help in spotting inefficiencies in the processes leading to better risk assessment and management too.
Transportation is one of the lifelines of the logistics sector and AI goes a long way in making it healthier with better planning, more clarity, and improved route and cost management. For instance, AI can show the status of the vehicles and transportation fleet like the availability of vehicles, the ones in movement, the ones that need servicing, and the ones that need replacement.
AI also helps in proper freight matching. Vendors and stakeholders of other industries often look for cheap and best logistics services. Using a Transport Management System with ML technologies can help companies to find potential customers and update with accurate information including rates, routes, and other transport solutions for goods.
Dynamic and Strategic Pricing
After COVID, the economy in many countries has become highly unstable. This is one of the biggest reasons why most businesses are turning towards strategic and dynamic pricing including logistics companies. As the supply and demand chain keeps getting complex along with irregularities in other resources like fuel, manufacturing costs, maintenance costs, etc., companies are opting for dynamic pricing.
The pricing models are designed on the basis of factors that make the maximum impact on costs like location, pricing models of competitors in different regions, and supply and demand along with consumer needs. AI-based software can help companies to keep an eye on these factors and come up with corrective pricing solutions thereby giving them a competitive edge and also enabling them to optimize resources.
The warehouse is the one segment that has been highly influenced by logistics IT solutions, mainly AI technology. Autonomous devices and systems including robotics are now heavily employed to carry out warehouse operations like order fulfillment, classification of goods, product labeling, etc. Online giants like Amazon have already ventured into this technology.
AI solutions for warehouses can have a great impact on the overall process. For once, it does ensure fewer errors, faster operations, and cost reduction. This in turn can greatly impact revenue generation. AI solutions can also result in more safety. Tools like image recognition can detect unauthorized admissions or access, or any erroneous act in manual operations.
AI has become a vital component of the logistics and supply chain industry. Companies that are ready to embrace and venture into this technology can surely benefit a lot from it. Most importantly, the players of this sector realize that to survive in the market, they need to turn towards logistics IT solutions and welcome AI into their operations. So if you still haven’t done it yet, it’s high time to upgrade your services.